Market Beat: First quarter best in decade
The first quarter of 2019 was the best quarter for the stock market in 10 years. Normally, when the first quarter of the year is good, the remainder of the year is, too. However, that doesn’t always occur.
In the first three months of this year, the S&P 500 had a gain of 13.07%. The Dow Jones Industrial Average was up 11.15% and the NASDAQ rose by 16.57%. Even if the rest of the year is basically flat, we’ll still have a good year. Technology was the best performing sector followed by real estate and industrials.
Foreign stocks have rebounded this year, too. Foreign stocks have been lagging recently, due to fears of a trade war and other issues, but those fears seem to have subsided for now and foreign equities got off to a good start this year. The EAFE, which stands for Europe, Asia and the Far East had a gain of 9.04%. The MSEM emerging markets index rose by 9.57%.
Interest rates have been dropping this year, also. The benchmark U.S. 10-year Treasury bond yield hit a 52-week high of 3.26% and has since fallen to 2.49%. The normal yield for the ten-year Treasury is between 4.5% to 5.0%. TLT, the ETF that consists of long-term US Treasury bonds had a gain of 4.52% in the first quarter and the IEF, the intermediate term US Treasury bond fund posted a gain of 2.78%.
Precious metals dropped in the first quarter, gold was down -0.35% and SLV, the ETF that represents silver fell by -2.34%. Inflation has been tame and precious metals tend to rise with inflation and can be good inflation hedges in a diversified portfolio.
Oil and energy stocks did well. Crude oil jumped by 30.94%, which is no fun when you need to go to the gas station to fill up. Unleaded gasoline is up 25.29% in the first quarter.
Earnings reporting season will get going in the next few weeks and the expectations are for the earnings growth that we’ve been seeing the last few quarters to slow down. Some of the earnings growth from the past can be attributed to the corporate tax cuts and the effect of that is behind us now. The Fed has announced that there probably won’t be any more interest rate hikes this year and maybe only one more next year.
Kenneth Roberts is a Truckee-based Registered Investment Advisor. Information is at his blog at http://www.sellacalloption.com or 775-657-8065. The mention of securities should not be considered an offer to sell or solicitation to buy investments mentioned. Consult your investment professional to understand the risks and/or how the purchase or sale of these investments may be implemented to meet your investment goals. Past performance is no guarantee of future results.
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